ENFORCEMENT OF FOREIGN JUDGMENTS IN INDIA

The enforcement of foreign judgments is the recognition and enforcement in one jurisdiction of judgments rendered in foreign jurisdiction. Foreign judgments may be recognized based on bilateral or multilateral treaties or understandings, or unilaterally without an express international agreement.

In the present of era globalization it is very emergent and necessary to execute and enforce judgments or decree passed by a competent court of one country to the jurisdiction of another country. As the cross border transaction is increasing day by day. In current scenario there are several hurdles in enforcing or executing the judgment or decree passed by a competent court of one country to another country. In India all the judgments and decree passed by any Indian Courts or by the foreign courts are executed and enforced only by the Civil Procedure Code 1908.

FOREIGN COURTS & JUDGMENTS

Section 2 (5) of CPC defines foreign court “means a court situated outside India and not established or continued by the authority of the Central Government”.

Section 2 (6) of CPC defines foreign judgment as “means a judgment of a foreign court”

Hence a judgment delivered by a court situated outside the jurisdiction of India is called as foreign judgment. 

JURISDICTION TO FOREIGN COURTS

The following circumstances would give jurisdiction to foreign court;

·         Where the person is a subject of the foreign country in which the judgment has been obtained;

·         Where he was a resident in the foreign country when the action was commenced and summons was served on him;

·         Where the person in the character of plaintiff selects the foreign court as the forum for taking action in which forum defendant resides;

·         Where the party on summons voluntarily appeared;

·         Where by an agreement, a person has contracted to submit himself to the forum in which the judgment is obtained.

HOW FOREIGN JUDGMENTS ARE ENFORCEABLE IN INDIA

In India there are two ways of executing and enforcing foreign judgments. First by filling an execution petition under section 44A of Civil Procedure Code in case the foreign judgment has been delivered by a reciprocating country.

Reciprocating country – “means any country or territory outside India which the Central Government may, by notification in the Official Gazette, declare to be a reciprocating territory”

Hence if a judgment/decree has been delivered by a reciprocating country, it can be directly executed in India by filling a certified copy in the District Court, as if it had been passed by the District Court.

Another way of enforcing a foreign judgment is by way of filing a fresh suit on the basis of foreign judgment /decree passed by non-reciprocating country. Hence the judgment/decree passed by non-reciprocating country will be only treated only as a piece of evidence for establishing cause of action.

However in both the above mentioned circumstances it has to pass the test of section 13 & 14 of CPC which specifies certain exceptions under which the foreign judgment becomes inconclusive and is therefore not executable in India.

SECTION 13 CPC WHEN FOREIGN JUDGMENT NOT CONCLUSIVE

A foreign judgment shall be conclusive as to any matter thereby directly adjudicated upon between the same parties or between parties under whom they or any of them claim litigating under the same title except –

1. Where it has not been pronounced by a court of competent jurisdiction;
2. Where it has not been given on the merits of the case;
3. Where it appears on the face of the proceedings to be founded on an incorrect view of international law or a refusal to recognize the law of India in cases in which such law in applicable;
4. Where the proceedings in which the judgment was obtained are opposed to natural justice;
5. Where it has been obtained by fraud;
6. Where it sustains a claim founded on a breach of any law in force in India.

A foreign judgment may operate as res judicata except in the above mentioned six conditions specified in the section 13 and subject to the other conditions mentioned in Sec. 11 of C.P.C. The rules laid down in this section are rules of substantive law and not merely of procedure. The fact that the foreign judgment may fail to show that every separate issue, such as, the status of the contracting parties, or the measure of damages, was separately framed and decided, is irrelevant unless it can be shown that failure brings the case within the purview of one of the exceptions to Section 13 CPC. However In order to understand these exceptions a detailed explanation is given herein below.

1.  When judgment not pronounced by a competent jurisdiction:- It is held in Vishwanathan v. Abdul Wajid, AIR 1963 SC 1 that it is a fundamental principle of law that the judgment or order passed by the court, which has no jurisdiction, is null and void. Thus, a judgment of a foreign court to be conclusive between the parties must be a judgment pronounced by a court of competent jurisdiction. Such judgment must be by a court competent both by the law of state, which has constituted it and in an international sense and it must have directly adjudicated upon the “matter” which is pleaded as res judicata.
2. When judgment not given on merit:- it is held in Narsimha Rao v. Venkata Lakshmi, 1991 3 SCC 451 that in order to operate as res judicata, a foreign judgment must have been given on merits of the case. A judgment is said to have been given on merits when, after taking evidence and after applying his mind regarding the truth or falsity of the plaintiff’s case, the Judge decides the case one way or the other. Thus, when the suit is dismissed for default of appearance of the plaintiff; or for non-production of the document by the plaintiff even before the written statement was filed by the defendant, or where the decree was passed in consequence of default of defendant in furnishing security, or after refusing leave to defend, such judgments are not on merits. It is held in Lalji v. Hansraj, 1971 1 SCC 721, that the mere fact of a decree being ex parte will not necessarily justify a finding that it was not on merits. The real test for deciding whether the judgment has been given on merits or not is to see whether it was merely formally passed as a matter of course, or by way of penalty for any conduct of the defendant, or is based upon a consideration of the truth or falsity of the plaintiff’s claim, notwithstanding the fact that the evidence was led by him in the absence of the defendant.
3. When judgment is against international or indian law:- It is held in Vishwanathan v. Abdul Wajid, AIR 1963 SC 1 that a judgment based upon an incorrect view of international law or a refusal to recognize the law of India where such law is applicable is not conclusive. When a foreign judgment is founded on a jurisdiction or on a ground not recognized by Indian law or International Law, it is a judgment which is in defiance of the law. Hence, it is not conclusive of the matter adjudicated therein and, therefore, unenforceable in this country.
4. When judgment obtained is against the natural justice:- It is held in Sankaran v. Lakshmi 1975 3 SCC 351 that it is the essence of a judgment of a court that it must be obtained after due observance on the judicial process i.e., the court rendering the judgment must observe the minimum requirements of natural justice, it must be composed of impartial persons, act fairly, without bias, and in good faith; it must give reasonable notice to the parties to the dispute and afford each party adequate opportunity of presenting his case. A judgment, which is the result of bias or want of impartiality on the part of a judge, will be regarded as a nullity and the trial. Thus a judgment given without notice of the suit to the defendant or without affording a reasonable opportunity of representing his case is opposed to natural justice. Similarly, a judgment against a party not properly represented in the proceedings or where the judge was biased is contrary to natural justice and, therefore, does not operate as res judicata.
5. When foreign judgment obtained by fraud:- It is a well-established principle of Private International Law that if a foreign judgment is obtained by fraud, it will not operate as res judicata. All judgments whether pronounced by domestic or foreign courts are void if obtained by fraud, for fraud vitiates the most solemn proceeding of a court of justice. In the leading case of Satya v. Teja Singh 1975 1 SCC 120, it is held that where a husband obtained a decree of divorce against his wife from an American Court averring that he was domiciled in America. Observing that the husband was not a bonafide resident or domicile of America, and he had played fraud on a foreign court falsely representing to it incorrect jurisdictional fact, the Supreme Court held that the decree was without jurisdiction and a nullity. Again in Narsimha Rao v. Venkata Kakshmi 1991 3 SCC 451 Supreme Court held that wherein, A husband obtained a decree of divorce against his wife B again from an American High Court on the ground that he was a resident of America. Then he remarried C. B filed a criminal complaint against A and C for bigamy. A and C filed an application for discharge. Dismissing the application, the Supreme Court held that the decree of dissolution of Marriage was without jurisdiction in as much as neither the marriage was solemnized nor the parties last resided together in America. It was, therefore, unenforceable in India. In Chengalvaraya Naidu v. Jagannath 1994 1 SCC 1, the Supreme Court stated: “It is the settled proposition of law that a judgment or decree obtained by playing fraud on the court is a nullity and non est in the eyes of the law. Such a judgment/decree by the first court or by the highest court has to be treated as a nullity by every court, whether superior or inferior.
6. When judgment founded on breach of indian law:- It is held in Narsimha Rao v. Lakshmi, 1991 3 SCC 451 where a foreign judgment is founded on a breach of any law in force in India, it would not be enforced in India. The rules of Private International Law cannot be adopted mechanically and blindly. Every case, which comes before an Indian Court, must be decided in accordance with Indian law. It is implicit that the foreign law must not offend our public policy. Thus a foreign judgment for a gaming debt or on a claim, which is barred under the Law of Limitation in India, is not conclusive. Similarly, a decree for divorce passed by a foreign court cannot be confirmed by an Indian court if under the Indian law the marriage is indissoluble. It is implicit that the foreign law and foreign judgment would not offend against our public policy.

CONCLUSIVENESS OF FOREIGN JUDGMENT

As stated above, a foreign judgment is conclusive and will operate as res judicata between the parties and privies though not strangers. It is firmly established that a foreign judgment can be examined from the point of view of competence but not of errors. In considering whether a judgment of a foreign court is conclusive, the courts in India will not require whether conclusions recorded by a foreign court are correct or findings otherwise tenable. In other words, the court cannot go into the merits of the original claim and it shall be conclusive as to any matter thereby directly adjudicated upon between the same parties subject to the exception enumerated in clauses (a) to (f) of Section 13.

FOREIGN AWARDS

It is not open to the party, who is party to the award, to contend that the award was not given on merits of the case. Say that if the award was given against the rules of natural justice or it was fraudulently obtained, the party may not be prevented from putting forward those contentions. But it is difficult to accept the view because on a foreign judgment it is open to a party to contend that it was not given on the merits of the case, it is equally open to a party who is resisting the suit on the award to contend that the award was not given on the merits of the case.

CONCLUSION

It can be concluded that even if a judgment or a decree is passed by foreign courts against a defendant residing in India, the judgment or decree may not be enforceable against him due to the operation of section 13 of CPC. Hence due to section 13 of CPC, the plaintiff has to come to the Indian courts to either get the foreign judgment executed under section 44A or file a fresh suit upon the judgment for its enforcement. Therefore even getting a decree of foreign courts is a bigger risk because the plaintiff has to again satisfy the conditions of section 13 of CPC in order to make it enforceable in India. Hence it is better for a plaintiff to institute a suit in India itself in case the defendant is living in India.

SARFAESI ACT, 2002 & THIRD PARTY RIGHTS

The object of the Act, is aiming at reducing ‘Non-performing Asset” of the banks. The courts in our country have interpreted the provisions of the Act dealing with many complicated issues and keeping in view the interest of the borrowers. Many issues under the provisions of SARFAESI Act, 2002 are settled now. The two most important cases in that process are Mardia Chemicals Ltd v. Union of India and Transcore v. Union of India. Where the Supreme Court has settled the legal position substantially with regard to the SARFAESI Act and made the rigor of SARFAESI Act for the recovery of NPAs effective in letter and spirit. however, the issue of eviction of Tenant using the authority or the power under Section 14 remains very significant. Many states have special laws protecting the interests of the Tenants and it has a very great object despite criticism. There need not to be any written agreement or registered Lease Deed etc. for availing the protection under Tenant Protection laws in a particular state and the provision of tenant protection law will prevail. In the light of the object of SARFAESI Act, 2002 and the object of Tenant Protection Laws in a particular state, the issue of eviction of Tenant under Section 14 of SARFAESI Act, 2002 occupies significance. There can be complications if the bank is asked to approach the Rent Control Courts to evict the Tenant. Again, there can serious issues if the bank is allowed to proceed against the Tenant under Section 14 of the SARFAESI Act, 2002 without having any regard to the Lease Agreement, understanding or the Lease Deed. The complications with the eviction of Tenant by the bank in the course of its action under the provisions of SARFAESI Act, 2002 are in brief, as follows:-

·        If the bank is not allowed to proceed against the Tenant under Section 14 to take physical possession of the property, then the ‘Secured Asset’ may not fetch good value when it goes for auction. It can be detrimental to the interests of the borrowers and also can be detrimental to the interests of the banks too in some cases. The bidders may definitely discount the risk of eviction while bidding for the property in auction. If the property is not fetching the market value, then, It may provide a right to the borrower or the owner of the property to challenge the auction.

·        If the bank is asked to approach Rent Control Courts or Rent Control Tribunal under the special State law dealing with the protection of Tenants, then, it would be interesting to see as to the grounds available to the Banks to ask for the eviction of Tenants from the ‘Secured Asset’.

·        From Tenants point of view, he or she may suffer an irreparable loss due to the action of the bank under SARFAESI Act, 2002 and the Tenant may find it difficult to proceed against the owner of the property in getting the Advance amount back or in claiming the damages. There is a justification from Tenants point of view and it will be definitely difficult to the Tenant to vacate the premises immediately as against their plans. Who will compensate the Tenant in genuine cases.

·        We cannot also rule-out the possibility of fictitious arrangements or Agreements if the protection is provided to the Tenants and it is held that the banks cannot take physical possession of the ‘Secured Asset’ under Section 14. We know many cases pending before Rent Control Courts or Tribunal for years. In many cases, Tenants used to approach Debt Recovery Tribunal now under Section 17 as soon as they come to the knowledge of SARFAESI proceedings. The DRT, may rule in favor of bank in many of these cases and the Tenant is carefully been scrutinized.

LAWS REGULATING FALSE AND MISLEADING ADVERTISEMENT

ADVERTISEMENT – Wikipedia defines advertisement as “Advertising is a form of communication for marketing and used to encourage or persuade an audience (viewers, readers or listeners; sometimes a specific group) to continue or take some new action. Most commonly, the desired result is to drive consumer behavior with respect to a commercial offering, although political and ideological advertising is also common”.

LAWS REGULATING MISLEADING ADVERTISEMENT IN INDIA

There is no codified law regulating advertisement in India. The Advertising Standards Council of India is a non statutory body set up in 1985 and incorporated under Section 25 of the Companies Act, 1956. It entertains and disposes of complaints based on its Code of Advertising Practice. The Code is based on certain fundamental principles; clause 1 of its principle says "To ensure the truthfulness and honesty of representations and claims made by advertisements and to safeguard against misleading advertisements.

That the enforcement of the above advertisements Code, by virtue of Rule 7 (9) of the Cable Television Network Rules appears plausible in theory, the aforesaid Rules do not create an enforcement mechanism which has the necessary teeth.

DEFINITION OF “UNFAIR TRADE PRACTICES”

"Unfair trade practice" has been defined under Section 36 (A) as follows:

36 (A) unfair trade practice - In this Part, unless the context otherwise requires, "unfair trade practice" means a trade practice which, for the purpose of promoting the sale, use or supply of any good or for the provision of any services, adopts any unfair method or unfair or deceptive practice including any of the following practices, namely:

Relevant clause reads as -

36A(1)(vi)     Makes a false or misleading representation concerning the need for, or the usefulness of, any goods or services;

36A(1)(xi)     Gives false or misleading facts disparaging the goods, services or trade of another person.

However it is submitted that MRTP Act, 1969 is repealed by virtue of section 66 of the Competition Act, 2002.

“UNFAIR TRADE PRACTICES” IN CONSUMER PROTECTION ACT, 1986

The definition of “unfair trade practices” has been imported into the Consumer Protection Act, 1986 by the Amendment Act 50 of 1993, in Section 2(1)(r) of the Consumer Protection Act, 1986. A careful scrutiny of all the sub-clauses in Section 2(1)(r) of the Consumer Protection Act would show that 4 types of representations are categorized as "unfair trade practices" namely

1.      False representations falling under sub-clauses (i), (ii) and (iii);

2.      Representations which may not necessarily be false but are nevertheless incorrect coming under sub-clauses (iv) and (v);

3.      Warranty or guarantee coming under sub-clauses (vii) and (viii);

4.      False or misleading representations falling under sub-clauses (vi), (ix) and (x).

5.      If an advertisements contains a false representation within the meaning of sub clauses (i) to (iii) or an incorrect representation within the meaning of sub clauses (iv) and (v) or a warranty or guarantee within the meaning of sub clauses (vii) and (viii) or a false or misleading representation or fact within the meaning of sub clauses (vii), (ix) and (x) of Clause (1) of Section 2(1)(r) of the Consumer Protection Act.

RIGHT TO ADVERTISEMENT UNDER THE CONSTITUTION OF INDIA

Advertisement as a free commercial speech and the status of the right of the consumer to know and receive information, both of which forms part of the fundamental right of freedom of speech and expression under constitution of India.

1.      Publication of advertisement being free commercial speech, is protected by Article 19 (1) (a) of the Constitution.

2.      There are a few restrictions on the aforesaid right, which would satisfy the test of reasonableness under Article 19(2). These restrictions could be traced to the definition of the term "unfair trade practice" in Section 36 (A) of the Monopolies and Restrictive Trade Practices Act, 1969 and Section 2(1)(r) of the Consumer Protection Act, 1986.

IF ADVERTISEMENT IS MISLEADING ACTION WOULD LIE IN?

·        An advertisement which falls within the definition of the term "unfair trade practice", an action may lie in before a Consumer Forum, at the instance of a consumer or a group of consumers or a voluntary consumer association or even the Central or the State Government as per the definition of "complainant" under Section 2(1)(b) of the Consumer Protection Act.

·        An action may lie against such an advertisement before a civil court both at the instance of a manufacturer or marketer and at the instance of a consumer (since Section 3 makes the Consumer Protection Act an additional law and not a law in derogation of any other law), provided that the advertisement in question contains a false representation coming within the 4 corners of sub-clauses (i) to (x) of Clause (1) of Section 2(1)(r) of the Consumer Protection Act.

PRINCIPLE EXTABLISHED BY HON’BLE COURTS IN INDIA WITH RESPECT OF MISLEADING ADVERTISEMENT

In Reckitt and Colman of India Ltd. v. M.P. Ramchandran 1999 19 PTC 741, the Calcutta High Court considered the concept of negative advertisement and held that:

1.      A tradesman is entitled to declare his goods to be best in the world, even though the declaration is untrue.

2.      He can also say that his goods are better than his competitors', even though such statement is untrue.

3.      For the purpose of saying that his goods are the best in the world or his goods are better than his competitors' he can even compare the advantages of his goods over the goods of others.

4.      He however, cannot, while saying that his goods are better than his competitors', say that his competitors' goods are bad. If he says so, he really slanders the goods of his competitors. In other words he defames his competitors and their goods, which is not permissible.

5.      If there is no defamation to the goods or to the manufacturer of such goods  no action lies, but if there is such defamation an action lies and if an action lies for recovery of damages for defamation, then the Court is also competent to grant an order of injunction restraining repetition of such defamation.

It is now a settled law that mere puffing of goods is not actionable. Tradesman can say his goods are best or better. But by comparison the tradesman cannot slander nor defame the goods of the competitor nor can call it bad or inferior. It has been so held in the following cases:

1.      Hindustan Lever v. Colgate Palmolive (I) Ltd. AIR 1998 SC 526.

2.      Reckitt and Colman of India Ltd. v. M.P. Ramchandran and Anr. 1999 1 PTC 741.

3.      Reckitt and Colman of India v. Kiwi TTK Ltd. 1996 16 PTC 393.